Is Metsera a slim buy at $29 per share or is the stock already fat after a binge IPO?

February, 9 2025

Is Metsera a slim buy at $29 or is the weight loss drug stock already fat? 

Metsera Inc. (NASDAQ: MTSR), the weight loss drug maker, had a fat IPO. Value weight should begin to come off later this month. 

Metsera Inc. is a clinical-stage biotechnology company dedicated to developing innovative treatments for obesity and related metabolic disorders. Founded in 2022 and headquartered in New York City, Metsera focuses on creating next-generation injectable and oral nutrient-stimulated hormone (NuSH) analog peptides designed to address the physical, emotional, and economic burdens of obesity. 

Metsera's development pipeline includes three promising therapeutic candidates:

1. MET-097i: A fully biased, ultra-long-acting GLP-1 receptor agonist intended for subcutaneous injection. In a Phase 2a clinical trial, MET-097i demonstrated an average weight loss of 11.3% over 12 weeks, with some participants experiencing up to 20% weight reduction. The therapy was well-tolerated, with mild and transient gastrointestinal side effects. These results suggest the potential for MET-097i to be administered as a once-monthly injection. 
2. MET-233i: An injectable amylin analog aimed at enhancing weight loss, currently in preclinical development. Metsera is exploring the potential of MET-233i to achieve effective weight reduction with less frequent dosing.
3. MET-224o: An oral NuSH analog peptide designed to offer an alternative to injectable treatments, currently in preclinical stages. This candidate aims to provide patients with a convenient oral therapy option without compromising efficacy. 

In 2024, Metsera entered into a strategic collaboration with Amneal Pharmaceuticals to develop and manufacture its portfolio of weight loss and metabolic disease medicines. This partnership leverages Amneal's expertise in complex pharmaceutical manufacturing to support the large-scale production of Metsera's therapies. 

Metsera has secured substantial funding to advance its research and development efforts. In April 2024, the company launched with $290 million in financing from investors including Population Health Partners and ARCH Venture Partners. Subsequently, Metsera raised an additional $215 million in a Series B funding round to further support its clinical programs. 

On January 31, 2025, Metsera completed its initial public offering (IPO), raising $275 million by offering 15.28 million shares at an IPO price of $18 per share. The stock debuted on the Nasdaq Global Market under the ticker symbol "MTSR," closing its first trading day at $26.50. As of February 7, 2025, Metsera's stock closed at $29.50, reflecting a 64% increase from its IPO price of $18. Metsera is currently valued at about $3 billion. 

Metsera's innovative approach and promising clinical data position it as a notable contender in the rapidly evolving field of obesity treatment.  

Should you buy Metsera this week?

No. You should add Metsera to stocks in your radar. The weight loss is a money-maker. Metsera could very well be into something big and make your investment account fat in the next few years. Nonetheless, already up 70% from its IPO and with a potentially unsupported valuation of $3 billion, Metsera may come down before going back up again eventually. Short interest in the stock is increasing because experience shows that the doctrine of "easy comes, easy goes" applies to many IPOs. The algorithms may have gone ahead of themselves buying the successful IPO. 

Historically, IPOs that achieve substantial first-week gains often experience varied performance in subsequent periods. According to a study by the University of Florida, while the average first-day return for IPOs from 1980 to 2022 was positive, long-term performance tended to decline, with many IPOs underperforming the market over a three-year horizon. However, there are instances where IPOs have sustained high returns beyond their initial surge. For example, in 2024, Reddit's IPO stood out by gaining 380% since its debut in March, significantly outperforming other major listings. Those cases tend to be the exception, not the rule. 

Of course, past performance of other IPOs does not guarantee similar outcomes for Metsera. The biotechnology sector, in particular, is subject to high volatility due to factors such as clinical trial results, regulatory approvals, and market competition. Investors should exercise caution, conduct thorough due diligence, and consider consulting with financial advisors before making investment decisions related to Metsera.

Creatix believes that Metsera will see a yo-yo diet pattern in its valuation with significant volatility in the next 12 months. Metsera may be a good opportunity in the long run, but it is too early to tell. Our guess is that Metsera will lose plenty of "weight" before finding a stable valuation for its class. We suggest having patience and waiting for an entry point when Metsera falls below a $2 billion market valuation. Eventually, it may come back to $3 billion and settle there for some time. There are way too many variables in clinical stage drugs. 

To be sure, most Americans will continue gaining weight. Weight loss drugs like the ones Metseara is testing will continue increasing in popularity. Demand will increase, but so will supply and competition in the marketplace.  

In summary, while Metsera's initial stock performance has been strong, and may even continue relatively strong this month, chances are that the stock will see a correction before the market assigns it a consensus valuation. The absence of comprehensive analyst opinions on Metsera makes it challenging to predict future movements. Historical data suggests that initial gains in IPOs like the one experienced by Metsera can be followed by a correction or mixed long-term performance. Metsera belongs in anyone's radar, but not necessarily on the portfolio yet, especially if you missed the IPO last week. 

Don't want to miss IPOs? Stay tuned.

Now you know it.

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